EUROPEAN ECONOMY
Economic and Financial Affairs
ISSN 2443-8049 (online)
3rd Quarter 2020
TECHNICAL PAPER 043 | OCTOBER 2020
European BusinessCycle Indicators
EUROPEAN ECONOMY
European Economy Technical Papers are reports and data compiled by the staff of the European Commission’s Directorate-General for Economic and Financial Affairs. Authorised for publication by Reinhard Felke, Director for Policy, Strategy and Communication. The Report is released every quarter of the year.
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European Commission Directorate-General for Economic and Financial Affairs
European Business Cycle Indicators 3rd Quarter 2020
Special topic The impact of COVID-19 and containment measures on business sentiment
across the EU: Drilling down on subsector results.
This document is written by the staff of the Directorate-General for Economic and Financial Affairs, Directorate A for Policy, Strategy and Communication, Unit A3 - Economic Situation, Forecasts, Business and Consumer Surveys (http://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys_en). Contact: [email protected].
EUROPEAN ECONOMY Technical Paper 043
CONTENTS
OVERVIEW ......................................................................................................................................... 6
1. RECENT DEVELOPMENTS IN SURVEY INDICATORS ...................................................................... 7
1.1. EU and euro area....................................................................................................................... 7
1.2. Selected Member States ........................................................................................................ 15
2. SPECIAL TOPIC: THE IMPACT OF COVID-19 AND CONTAINMENT MEASURES ON BUSINESS
SENTIMENT ACROSS THE EU: DRILLING DOWN ON SUBSECTOR RESULTS ................................ 19
ANNEX TO SECTION 1 ..................................................................................................................... 26
ANNEX ............................................................................................................................................. 28
6
OVERVIEW
Recent developments in survey indicators
The Economic Sentiment Indicators (ESI) for the euro area (EA) and the EU
continued to rise during the third quarter of 2020, gaining, in both regions, 15.3
points over the quarter and recovering close to 70% of the combined losses of March
and April. At 91.1 (EA) and 90.2 (EU) points, both indicators are still below their
long-term average of 100.
While losing steam compared to the early rebound phase of May and June, also the
Employment Expectations Indicator (EEI) continued to recover during the third
quarter of 2020. The indicator recovered around 70% of the losses incurred in March
and April. At 91.8 in both the EA and the EU, the employment indicator remains
below its long-term average of 100.
The recovery in economic sentiment over the third quarter was driven by substantial
improvements in the services, retail trade and industry sectors. By contrast,
confidence in construction and among consumers remained broadly unchanged
compared to June.
Consumers’ savings expectations rose further over the third quarter, hitting an
historical high in September.
At country level, the ESI continued to recover in all six largest EU economies. In
2020-Q3, marked increases were registered in France (+19.1), Italy (+17.8), the
Netherlands (+14.5), Germany (+13.6), and Poland (+6.6).
While capacity utilisation in manufacturing rebounded (+3.8 percentage points in the
EA, +3.5 in the EU), it recovered only a fraction of the 12.6 (EA) and 11.9 (EU)
percentage points loss recorded in the previous survey wave in April. At 72.1% (EA)
and 72.4% (EU) in July, industrial capacity utilisation thus remained far below its
long-term average of 80.7% (EA) and 80.6% (EU). By contrast, capacity utilisation
in services registered a further marginal decrease by 0.1 percentage points in both
regions. At 85.6% (EA) / 86.0% (EU), the rates remained below their respective
long-term averages (as calculated from 2011 onwards) of 88.8% and 89.1%.
Special topic: The impact of COVID-19 and containment
measures on business sentiment across the EU: drilling down on
subsector results
While the COVID-19 pandemic and the ensuing containment measures have hit hard the EU
economies, their effect on businesses has varied greatly across subsectors. The special topic
looks at detailed BCS data for 66 branches (i.e. divisions from the NACE Rev. 2
classification), so as to identify which subsectors have been most or least affected. Business
assessments and expectations in travel services, accommodation and food services have
been severely hit and the recovery is still lagging behind other sectors. By contrast, industry,
and in particular heavy industry, stands out as an activity where managers’ business
assessments of the past appear to have recovered virtually fully since February. Finally,
manufacture of basic pharmaceutical products and pharmaceutical preparations has been
virtually unaffected during the health crisis.
7
1. RECENT DEVELOPMENTS IN SURVEY INDICATORS
1.1. EU and euro area
Due to strict containment measures enacted
across Europe, the Economic Sentiment
Indicators (ESI) for the euro area (EA) and the
EU fell dramatically in March and April. In
May and June, when the containment measures
were gradually released, the indicators started to
recover. During the third quarter of 2020, the
indicators continued to rise, gaining, in both
regions, 15.3 points over the quarter and
recovering nearly 70% of the combined losses
of March and April. At 91.1 (EA) and 90.2
(EU), both indicators are still well below their
long-term average of 100.
Graph 1.1.1: Economic Sentiment Indicator
Note: The horizontal line (rhs) marks the long-term average of the
survey indicators. Confidence indicators are expressed in balances
of opinion and hard data in y-o-y changes. If necessary, monthly
frequency is obtained by linear interpolation of quarterly data.
While losing steam compared to the early
rebound phase of May and June, also the
Employment Expectations Indicator (EEI)1
continued to recover during the third quarter of
2020. In September, the indicator for both the
EA and the EU was 8.8 points higher than in
June. While recovering around 70% of the
losses incurred in March and April, at 91.8 in
both the EA and the EU, the employment
indicator remains significantly below its
February level (−13.2 points in the EA and
−12.7 in the EU), and clearly below its long-
term average of 100. Zooming into the EEI's
sectoral components (see Graphs 1.1.5 and
1.1.7 below), employment plans in September
were higher than in June in all sectors.
However, the construction sector's increase was
only marginal.
Graph 1.1.2: Employment expectations indicator
1 The new indicator has been presented in the 2019-
Q4 special topic of the European Business Cycle
Indicators publication (see also the Methodological User Guide to the Joint
Harmonised EU Programme of Business and Consumer Surveys, p. 22, for a description of
the EEI).
8
During the third quarter, developments in the
ESI were only partly in line with developments
in other survey-based bellwethers for the
EA/EU. Markit Economics' PMI Composite
Output Index rebounded very strongly until
July, even outperforming its February level. It
then fell again slightly in August and
September, reaching a level of 50.1, lower than
in February. The trend discrepancy is partly
explicable by differences in the sectoral
coverage of the two indicators and the time
horizons to which the underlying survey
questions refer.
By contrast, the Ifo Business Climate Index for
Germany showed a similar path to that of the
ESI. It continued to recover over the third
quarter, albeit at a somewhat slower speed than
in May and June, and is still slightly below its
February level.
Graph 1.1.3: Radar Charts
50
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Euro area
Historical average Jun 20 Sep 20
50
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
EU
Historical average Jun 20 Sep 20
Note: A development away from the centre reflects an
improvement of a given indicator. The ESI is computed with the
following sector weights: industry 40%, services 30%, consumers
20%, construction 5%, retail trade 5%. Series are normalised to a
mean of 100 and a standard deviation of 10. Historical averages
are generally calculated from 2000q1. For more information on
the radar charts see the Special Topic in the 2016q1 EBCI.
Looking at the ESI’s sectoral components (see
Graph 1.1.3), the recovery over the third quarter
was driven by substantial improvements in the
services, retail trade and industry sectors. By
contrast, confidence in construction and among
consumers remained broadly unchanged
compared to June. In industry, confidence
recuperated around 80% of the losses of March
and April. Having registered the most important
fall during the crisis, confidence in the services
sector recovered only close to 60% of the losses
registered from March to May. The rebound in the
retail trade sector offset around 70% of its
previous losses registered in March and April.
Construction is the only sector where the
confidence indicator stands above its long-term
average. However, the indicator is still far below
its pre-crisis level and recovered only around 35%
of the losses incurred due to the pandemic.
Finally, confidence among consumers recovered
some 50% of the combined losses of March and
April.
At county level, the ESI continued to recover in
all six largest EU economies. In September
compared to June, marked increases were
registered in France (+19.1), Italy (+17.8), the
Netherlands (+14.5), Germany (+13.6), and
Poland (+6.6). All in all, in these countries,
between 55% (Spain) and 80% (Germany) of
confidence losses suffered during the lockdown
were recovered.
Graph 1.1.4: Industry Confidence indicator
9
Sector developments
Industry confidence continued to recover
during the third quarter, albeit at a reduced
speed. In September, the indicator was 10.5
(EA) and 10.4 (EU) points higher than in June.
In both areas, most of this increase was booked
in July, while in August and September, the
recovery lost steam. All in all, industry
confidence recovered some 80% of the losses
attributable to the pandemic. Having scored
below their respective long-term averages
already before the crisis set in, both indicators
are currently still well below average (see
Graph 1.1.4).
Zooming into the individual components of
EA/EU industrial confidence, all three
components improved markedly over the
quarter. The increase in managers’ assessment
of their order books was particularly strong.
Though to a lesser extent, also managers’
production expectations and assessment of
their stocks improved markedly. However,
over the quarter, the speed of recovery slowed
down in all three components. In particular,
managers’ production expectations increased
markedly in July, but decreased in August and
picked up only slightly in September.
Of the components not included in the
confidence indicator, managers’ views on past
production increased substantially, as did,
albeit to a lesser extent, their appraisal of
export order books. In both cases, however,
the growth lost steam in September.
In line with the EA/EU industry confidence
indicator, managers’ employment expectations
(see Graph 1.1.5) continued to recover, but, also
in this case, the recovery slowed down over the
quarter. Managers’ selling price expectations
are now higher than in June, resulting from a
marked increase in July, followed by a decrease
in August and a small pickup in September.
Industry confidence recovered markedly in all
six largest EU Member States. The largest rises
from June to September were in Germany
(+13.4), Spain (+12.1) and Italy (+10.3).
Significant increases were also booked in
Poland (+8.1), the Netherlands (+8.0), and
France (+7.5). In most cases, however, the
speed of the recovery lost momentum
throughout the quarter; in France and the
Netherlands the indicator decreased marginally
in September.
Graph 1.1.5: Employment expectations in Industry
According to the quarterly manufacturing
survey (carried out in July), capacity
utilisation in manufacturing recovered around
30% of the losses that were recorded in the
previous survey in April. The indicator
increased in both the EA (+3.8 percentage
points) and the EU (+3.5 percentage points)
compared to April. At 72.1% (EA) and 72.4%
(EU) in July, both indicators remained well
below their respective long-term averages of
80.7% (EA) and 80.6% (EU).
10
Graph 1.1.6: Services Confidence indicator
After showing first signs of recovery in June,
services confidence increased noticeably
during the third quarter, even though at
somewhat diminishing speed. The indicator
increased by 24.4 points in the EA and by 23.8
points in the EU, making up for around 60% of
the losses recorded in March, April and May. In
both the EA (−11.1) and the EU (−11.4), the
level of services confidence is still well below
its respective long-term average (see Graph
1.1.6).
Managers in the EA/EU services sector revised
their appraisals of past demand and the past
business situation sharply up. By contrast,
their demand expectations recovered in July
but declined in August and September, resulting
in a weaker increase than in the two other
components when comparing September to
June.
In both the EA and the EU, employment
expectations in services continued to recover
in the third quarter but the increases were lower
than the ones recorded in May and June (see
Graph 1.1.7). Managers’ selling price
expectations increased sharply in July,
offsetting around 50% of the dramatic decrease
registered in April, and then remained broadly
stable for the rest of the quarter.
Graph 1.1.7: Employment expectations in services
Focussing on the six largest EU economies, the
period from June to September saw exceptional
increases in services confidence in the
Netherlands (+32.5), Italy (+29.5), France
(+29.4), Germany (+22.5), and Poland (+20.2).
In Germany, however, the recovery came to a
halt in September, when the indicator remained
unchanged. In Spain (+4.4) the improvement in
confidence was less important due to a marked
setback registered in August.
After having booked the by far strongest decline
on record (since 2011) in April, Capacity
utilisation in services, as measured by the
quarterly survey conducted in July, registered a
further marginal decrease by 0.1 percentage
points in both the EA and the EU. At 85.6%
(EA) / 86.0% (EU), the rates remained
markedly below their respective long-term
averages (as calculated from 2011 onwards) of
88.8% and 89.1%, respectively.
Retail trade confidence in the EA increased
strongly in 2020-Q3. In September the indicator
was 10.7 points (EA) and 11.3 points (EU)
higher than in June, recovering about 70% of
previous losses. Also in this case, however, the
growth has slowed down towards the end of the
quarter. In both areas, confidence remains well
below long-term average (see Graph 1.1.8).
11
Graph 1.1.8: Retail Trade Confidence indicator
As in industry and services, managers in retail
trade are becoming more pessimistic concerning
their expectations in respect of the future
business situation, which improved in July but
then decreased in August and September.
Managers’ assessment of the past business
situation and the level of stocks improved
strongly over the quarter. The stocks assessment
is currently more benign than it was in
February.
For the six largest EU economies, confidence
posted substantial increases in Poland (+19.6),
France (+16.6), Italy (+13.7), Germany (11.1)
and the Netherlands (+8.8). In Spain (+0.7)
confidence remained broadly stable, swinging
during the quarter around the level reached in
June.
Compared to the other business sectors,
construction confidence posted a milder
improvement of 1.7 (EA) / 2.1 (EU) points. In
both regions, the indicator is now slightly above
long-term average (see Graph 1.1.9).
Nonetheless, the indicator is still far below its
February level and recovered only 35% of the
dramatic drop registered from March to May.
At component level, in both regions, managers’
views on order books and their employment
expectations improved in September compared
to June. Employment expectations, however,
booked two consecutive drops in July and
August, and picked up only in September.
Graph 1.1.9: Construction Confidence indicator
Among the six largest EU economies,
construction confidence increased strongly in
the Netherlands (+10.2), Poland (+7.3), Italy
(6.2), and, to a lesser extent Germany (+2.7).
By contrast, the indicator decreased markedly in
Spain (−6.3) and slightly in France (−2.1).
Consumer confidence remained broadly stable
over the quarter. In September, the indicator
was only marginally higher than in June (+0.8 in
the EA, +0.7 in the EU). All in all, the indicator
recuperated around 50% (EA) and 45% (EU) of
the reductions of March and April, remaining far
below long-term average (see Graph 1.1.10).
Looking at the individual components of
consumer confidence, in both areas, consumers
were more optimistic only about their
expectations about the general economic
situation, while their views on their future
personal financial situation remained broadly
stable. Consumers’ intentions to make major
purchases and their assessment of the past
personal financial situation deteriorated. The
drop was particularly strong in the latter.
12
Graph 1.1.10: Consumer Confidence indicator
While not included in the Consumer confidence
indicator, consumers’ savings expectations
rose further over the third quarter, continuing
the surge observed in the second quarter and
hitting an historical high in September.
At the country level, consumer sentiment
increased only in Germany (+2.5), France and
the Netherlands (both +2.0), while it remained
broadly stable in Italy, Poland (both −0.4) and
Spain (−0.7).
In the EA and the EU, the mean of consumers'
quantitative price perceptions remained
broadly stable in 2020-Q3 compared to 2020-
Q2, while the median increased slightly. As
regards consumers’ price expectations, both
mean and median at both EA- and EU-level
decreased markedly in 2020-Q3 (see Graph
1.1.11).2
More detailed results, broken down by different
socio-economic groups, are available in tables
A.1.1 and A.1.2 of the Annex to section 1.
2 For more information on the quantitative inflation
perceptions and expectations, see the special
topic in the previous EBCI 2019Q1.
Graph 1.1.11: Euro area and EU quantitative consumer
price perceptions and expectations
The financial services confidence indicator
(not included in the ESI) strengthened by 29.5
(EA) / 30.8 (EU) points from June to
September. Although the indicator recovered
around 90% of the losses registered in March
and April, it remained well below long-term
average (see Graph 1.1.12).
Taking a look at the individual components
underlying the indicator, waxing confidence
was fuelled mainly by striking increases in
managers’ assessments of past demand and the
past business situation. Also their expectations
for future demand finished contributing
positively to the quarterly increase, after some
volatility during the quarter.
13
Graph 1.1.12: Financial Services Confidence indicator
Reflecting the improvement but also the slower
pace of recovery of overall sentiment over
2020-Q3, both the EA and the EU climate
tracers (see Annex for details) remain in the
upswing quadrant but are pointing to the
contraction quadrant (see Graphs 1.1.13 and
1.1.14).3
Similar to overall sentiment, the dedicated
climate tracers for all but one of the surveyed
sectors (see Graph 1.1.15) saw decelerating
growth in both the EA and the EU. The tracers
of these sectors are in the upswing area moving
closer to the contraction quadrant. The only
exception was the construction sector, which
points to the expansion area.
3 To avoid that the recent sudden declines and
recoveries in the indicators are smoothed out by
averaging with pre-crisis observations, the observations since March, unlike all previous
observations, have not been run through the usual HP filter. This applies to all climate tracer
graphs in this edition.
Graph 1.1.13: Euro area Climate Tracer
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
Graph 1.1.14: EU Climate Tracer
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
14
Graph 1.1.15: Economic climate tracers across sectors
Euro area EU
-4
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5 1
Industry
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-4
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5 1
Industry
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-5
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
Services
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-5
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
Services
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-5
-4
-3
-2
-1
0
1
2
-4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Retail trade
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-5
-4
-3
-2
-1
0
1
2
-4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Retail trade
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5
Construction
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5
Construction
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5 1
Consumers
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
-3
-2
-1
0
1
2
-2.5 -2 -1.5 -1 -0.5 0 0.5 1
Consumers
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
15
1.2. Selected Member States
Confidence increased in all large Member
States and in most sectors. Over the period from
June to September, sentiment climbed in Poland
(+20.3), France (+19.1), Italy (+17.8), the
Netherlands (+14.5), Germany (+13.6), and
Spain (+6.6).
Compared with June, sentiment in Germany
recovered 13.6 points until September.
Sentiment increased strongly in July and
August and, less so, in September. Sentiment
recovered nearly 80% of the total losses of
March and April, bringing the ESI to 95.5
points, still somewhat below the long-term
average of 100.
The sudden decrease in the speed of recovery
pushed the German climate tracer close to the
border of the upswing area with the contraction
quadrant (see Graph 1.2.1).4
The Employment Expectations Indicator (EEI)
rose (+6.7 points in September compared to
June), reflecting more optimistic employment
plans across all four business sectors.
From a sectoral perspective, confidence rose
sharply in industry, services and retail trade,
while the rises were milder in construction and
among consumers. While confidence is still
well below its February level in services, retail
trade, construction, and among consumers,
confidence in industry completely recovered
from the blow due to the COVID-19 pandemic
and is now above its February level. Confidence
indicators for construction and retail trade are
now scoring far above their long-term averages,
while confidence in industry and among
consumers is below but close to its long-term
average. By contrast, confidence in services is
still scoring far below its long-term average (see
Graph 1.2.2).
4 All observations since March of all climate tracers
have not been smoothed (filtered), see footnote
3.
Graph 1.2.1: Economic Sentiment Indicator
and Climate Tracer for Germany
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
Graph 1.2.2: Radar Chart for Germany
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
In France, the ESI soared during 2020-Q3,
gaining a total of 19.1 points over three months,
and recovering around 75% of previous losses.
Yet, at 96.6 points, the indicator is still
somewhat below its long-term average of 100.
Based on the latest sentiment data, during 2020-
Q3, the French climate tracer moved upward,
remaining in the upswing quadrant (see Graph
1.2.3).
16
Graph 1.2.3: Economic Sentiment Indicator
and Climate Tracer for France
60
70
80
90
100
110
120
-20
-15
-10
-5
0
5
2011 2013 2015 2017 2019
y-o-y real GDP growth (lhs) Economic Sentiment (rhs)
-4
-3
-2
-1
0
1
2
-3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Feb-03
Jan-08
The EEI recovered further (+10.7 points in
September compared to June), thanks to marked
improvements in employment plans in all
business sectors but one. Only managers in the
construction sector revised downward their
employment plans compared to June.
Graph 1.2.4: Radar Chart for France
50
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
The French radar chart (see Graph 1.2.4) shows
that the strongest increases were registered in
services and retail trade. Confidence improved
markedly also in industry and, less so, among
consumers, while it decreased slightly in the
construction sector. With the exception of
confidence in retail trade that recovered nearly
all losses recorded from March to May, all the
other confidence indicators are still well below
their February levels. Confidence in retail trade
and among consumers now scores very close to
long-term average, while confidence in the
other sector still remains below it.
Sentiment in Italy climbed (+17.8) from June to
September. The trough of the crisis is not
known as data could not be collected in April.
At 89.0 points, the indicator is still markedly
below both its February level of 101.3 and its
long-term average of 100. In line with the
improving sentiment indicator, the Italian
climate tracer moved higher in the upswing
quadrant (see Graph 1.2.5).
Also the Italian EEI recovered (+7.8 points in
September compared to June), reflecting strong
increases in employment plans across all four
business sectors, in particular in services and
retail trade.
Graph 1.2.5: Economic Sentiment Indicator
and Climate Tracer for Italy
-4
-3
-2
-1
0
1
2
3
-1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
A look at the Italian radar chart (see Graph
1.2.6) shows mounting confidence in industry,
retail trade, and, in particular, services.
Confidence improved also in construction,
while it remained broadly stable among
consumers. Confidence levels continue to be far
below their long-term averages in industry and
services, while they are around it in retail trade
and among consumers. Confidence in
construction is now above its long-term
average. In all sectors, confidence continues to
score well below February levels.
17
Graph 1.2.6: Radar Chart for Italy
50
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
In Spain, the ESI currently stands at 89.7
points, i.e. 6.6 points above its June reading but
markedly below long-term average. The
indicator increased strongly in July, then
declined somewhat in August and picked up
slightly in September. Mirroring the recent
volatile developments, during 2020-Q3, the
Spanish climate tracer jumped from the
upswing area to the contraction quadrant and
came back to the upswing area in September
(see Graph 1.2.7).
Graph 1.2.7: Economic Sentiment Indicator
and Climate Tracer for Spain
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
leve
l
Sep-20
Jan-00
Jan-08
The Spanish EEI increased (+2.8 points in
September compared to June), resulting from a
striking increase in employment plans in
industry and a milder rise in services, which
were partly offset by decreases observed in the
retail trade and construction sectors.
As shown in the radar-chart (see Graph 1.2.8),
higher confidence resulted mainly from
markedly rising confidence in industry and a
small improvement in services, while
confidence in retail trade and among consumers
remained broadly unchanged at their June
levels. Confidence in the construction sector
declined somewhat in September compared to
June. In September, the indicators in all the
sectors were far below their respective long-
term averages. Moreover, except for industry
confidence that recovered around 70% of the
losses recorded in March and April, all other
indicators are far below their respective
February levels.
Graph 1.2.8: Radar Chart for Spain
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
In the Netherlands, sentiment gained 14.5
points from June to September, recovering
around 70% of the losses of March and April
and bringing the ESI to 91.9, still noticeably
below its long-term average of 100. The speed
of recovery slowed down at the end of the
quarter. Consequently, the Dutch climate tracer,
while remaining in the upswing quadrant,
moved into the direction of the contraction
quadrant (see Graph 1.2.9).
Also in the Netherlands, the EEI improved
markedly (+4.1 points in September compared
to June), thanks to strong increases in
managers’ employment plans across all four
business sectors, in particular in the
construction sector.
Since June, sentiment has returned forcefully in
services and, somewhat less strikingly, in
industry, retail trade and construction, while
confidence among consumes improved only
slightly. Confidence in industry, services and
among consumers remained below long-term
average, while in retail trade and construction,
confidence is above average (see Graph 1.2.10).
Construction is also the sector that recovered
18
most of the losses recorded during the crisis,
while in all other sectors, confidence is still far
below the February level.
Graph 1.2.9: Economic Sentiment Indicator
and Climate Tracer for the Netherlands
-4
-3
-2
-1
0
1
2
-3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
lev
el
Sep-20
Jan-00
Jan-08
Graph 1.2.10: Radar Chart for the Netherlands
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
In Poland, sentiment soared during the third
quarter of 2020, scoring an increase of 20.3
points from June to September. At 77.9 points,
the indicator is nevertheless still very far below
both its long-term average of 100 and its
February level of 99.2. Improving confidence
maintained the Polish climate tracer in the
upswing area, but the slowdown in the recovery
observed in September drove the tracer into the
direction of the contraction quadrant (see Graph
1.2.11).
The increase in the Polish EEI (+9.3 points in
September compared to June) resulted from
improved employment plans across all four
business sectors, in particular in the industry
and the construction sectors.
Graph 1.2.11: Economic Sentiment Indicator
and Climate Tracer for Poland
-5
-4
-3
-2
-1
0
1
2
3
-3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
downswing
upswingcontraction
expansion
m-o-m change
leve
lSep-20
Feb-03
Jan-08
As the radar chart shows (see Graph 1.2.12),
confidence rocketed in services and retail trade.
Marked increases were registered also in
industry and construction, while confidence
among consumers remained broadly at the same
level as in June. The level of confidence is
markedly below long-term average in all
sectors, except for construction. Finally,
confidence is still well below its February level
in all sectors.
Graph 1.2.12: Radar Chart for Poland
30
50
70
90
110
ESI
Industry
Construction
Services
Retail trade
Consumers
Historical average Jun 20 Sep 20
19
2. SPECIAL TOPIC: THE IMPACT OF COVID-19 AND CONTAINMENT
MEASURES ON BUSINESS SENTIMENT ACROSS THE EU: DRILLING
DOWN ON SUBSECTOR RESULTS
With the outbreak of the coronavirus pandemic
in Europe in February and March, confidence
in the economy as measured by the European
Commission’s business surveys plummeted in
the three months to May, and has recovered
only partially since then. While this broad
picture reflects what happened in most EU
Member States and across business sectors, the
effect of the pandemic and the ensuing
containment measures on businesses shows
some notable differences across subsectors.
This special topic aims at refining the general
picture, by looking at detailed data from the
harmonised EU BCS programme at the
subsector level.
The harmonised EU BCS programme
comprises five business surveys, in
manufacturing industry, services, building,
retail trade, and financial services. Within
these broader sectors, the BCS Programme
collects information on 66 branches, i.e.
divisions (two-digit level) from the NACE
Rev. 2 classification (e.g. “Manufacture of
chemicals and chemical products” or “Food
service activities”) for the industry, services,
retail trade, and construction surveys. As series
at this level can be based on relatively small
samples especially in smaller countries, their
use and interpretation deserve some caution.
However, they provide a wealth of information
that allows to dive deep into the business
impact of the pandemic and containment
measures division by division.
The special topic is organised as follows. The
first part looks at the impact on managers’
business perceptions of the restrictions to
economic activity across the 66 subsectors.
The second part zooms in on the date when the
individual series hit rock bottom before
starting recovering. Finally, the third part
focusses on how much of the losses in
sentiment have been recovered by the end of
September.
Crashing sentiment during the
confinement
The first acute phase of the pandemic hit the
EU between March and May, as most Member
States had to impose severe restrictions on
business activity. During this period, some
business sectors were almost fully shut down
(e.g. food service activities, air travel, etc.),
while others could operate at reduced or even
full capacity. In most business surveys, this
first phase is reflected in a crash in sentiment.
Starting with managers’ backward-looking
assessments of their business situation, Graph
2.1 presents the losses recorded between
February and May 2020 (question 1 on past
production/situation) for the EU as a whole
across all business subsectors, at the NACE
rev. 2 division level.5 The subsectors are
ranked based on the size of the reported losses,
from highest (55, Accommodation) to the
lowest (21, Manufacture of basic pharmaceutical products and pharmaceutical
preparations).
Overall, the services sector (in yellow) was the
most affected sector, notwithstanding some
disparities across subsectors. The losses from
February to May were strongest in:
Accommodation (55) and Food service
activities (56)
Travel agency, tour operator and other
reservation service (79)
5 The results of the business surveys are balances
(in percentage points) of positive over
negative assessments of surveyed businesses.
For details, see the User guide of the EU BCS Programme:
https://ec.europa.eu/economy_finance/db_indicators/surveys/documents/bcs_user_guide_en.
pdf.
20
In industry (dark blue), the most affected
subsector was Manufacture of motor vehicles,
trailers and semi-trailers (29), while in retail
trade (light blue), Wholesale and retail trade
and repair of motor vehicles and motorcycles
was particularly hard hit.
By contrast, the most resilient subsectors were:
Manufacture of basic pharmaceutical
products and pharmaceutical preparations
(21)
Manufacture of food products (10)
Manufacture of paper and paper products
(17)
Retail trade, except of motor vehicles and
motorcycles (47)
Telecommunication (61)
Graph 2.1. Assessment of past production/situation, losses from February to May for the EU
Graph 2.2 presents the losses across subsectors
and countries. The shapes of the graph
represent the distribution of the losses across
countries. The subsectors are ranked in the
same order as in the previous graph.
The overall picture confirms that the impact
was broad-based across Member States in most
subsectors in services, retail trade and building,
with only few occurrences of non-negative
changes. However, Graph 2.2 also points to
notable disparities across EU Member States,
in particular in industry. In a number of
industrial subsectors, the change in managers’
business assessments during the pandemic was
limited, or even positive in some countries.
This points to differences in the severity of the
impact of the restrictions on business activity,
in particular in industry.
Graph 2.2. Assessment of past production/situation, losses from February to May across EU Member States
21
The subsector that stands out is Manufacture of
basic pharmaceutical products and
pharmaceutical preparations (division 21).
Although the balance for the EU as a whole
decreased slightly from February to May (−4.1
points), this subsector appears to have
increased production in many EU Member
States (see Graph 2.3).
Graph 2.3. Assessment of past production/situation,
losses from February to May across EU Member States
- Manufacture of basic pharmaceutical products and
pharmaceutical preparations (NACE Rev. 2 division
21)
While retail trade was strongly affected by the
restrictions imposed against the spread of the
pandemic, large disparities across subsectors
and countries emerge. While non-essential
shops were temporarily closed almost
everywhere across the EU, essential
distribution services (e.g. providing food)
remained operative. Accordingly, division 45
(Wholesale and retail trade and repair of motor
vehicles and motorcycles) ranked among the
most affected subsectors, while division 47
(Retail trade, except of motor vehicles and
motorcycles) ranked among those least
affected and, in some cases, even saw
improvements in managers’ assessments of the
business situation.
Graph 2.4 zooms in on the impact of the
containment measures on retail trade. On the
one hand, retail sale of Food, Beverages,
Tobacco (FBT) saw a smaller impact than the
rest of the retail trade sector, probably as
essential shops remained opened across the
EU. A non-negligible part of retailers across
Member States reported an improved or
broadly unchanged assessment of the past
situation. On the other hand, the assessment of
the past situation collapsed across countries in
the other retail trade subsectors: Sale of motor
vehicles (MVS), Maintenance of motor
vehicles and sale of accessories (MVRM),
Retail sale of other goods (OTHERS) and, with
only a few exceptions, Retail sale of
automotive fuel (FUEL).
Graph 2.4. Assessment of past production/situation,
losses from February to May across EU Member States
– Retail trade
When sentiment hit rock bottom
After hitting rock bottom, most survey series
show a partial recovery over summer. To better
understand the profile of this recovery at the
subsector level, Graph 2.5 displays when the
minimum was reached in the balance series
assessing the past situation across the 66
business subsectors. The yellow dots represent,
per country, the average point in time when the
economic assessments started to rebound,
weighted by sector weights.6
Most of the balance series at the subsector
level reached their minimum in May and June.
Accordingly, this is where almost all cross-
sector country averages are positioned. Yet, in
a non-negligible number of subsectors across
Member States, the trough was reached only in
July. What is more, the assessment of the past
situation kept deteriorating in several
6 The country averages are computed as the
weighted average of the series for industry, services, retail trade and building. The weights
are the same as in the ESI: 0.4 for industry, 0.3 for services, 0.05 for retail trade and
building. As the average does not cover
consumers, the weights are rescaled so that the sum is 1.
22
subsectors beyond July, hitting the local
minimum only in September. Finally, the
graph shows that the assessment of the past
situation started recovering first in
Luxembourg, Latvia and Germany (on average
with the May survey results). At the other end
of the spectrum, the pandemic only started
loosening its grip on business sentiment in
Greece, Denmark and Hungary in the course of
July. The turnaround came relatively late also
in a number of other Central and Eastern
European countries.
Graph 2.5 Dates of local minima in questions about
the past production/situation
While the backward-looking questions
accurately reflect managers’ assessment of the
actual business situation, forward-looking
questions inquiring business managers’
expectations might reflect more closely
managers’ sentiment and general economic
uncertainty. In the case of the COVID
pandemic, the analysis of when managers’
expectations reached their lowest point can
indicate when overall economic confidence in
getting to grips with the pandemic returned
despite a still ailing business situation.
Similar to the previous graph, Graph 2.6
presents the dates when expectations (for the
next three months) were at their lowest. The
lowest point was reached in, or close to the end
of, April in almost all EU Member States, with
the exception of Greece. In Italy, where no
survey data could be collected in April, the real
lowest point remains unknown. Also at the
subsector level, April was the moment of
lowest expectations in the vast majority of
subsectors.
Graph 2.6 Dates of local minima in expectations
questions
How is the recovery looking?
After a crash in business sentiment, the
economy entered a phase of recovery, starting
around May/June. However, this recovery has
only been partial in most cases so far.
To gauge the extent of the recovery we
compute the share of the maximum losses
recorded since February that has been
recovered by the end of September. Graph 2.7
presents this measure at the level of broader
sectors, based on managers’ assessments of
the past situation/production. Countries are
ordered according to the weighted average of
the sectors.
In industry (dark blue), the assessment of the
past production broadly recovered to its pre-
pandemic level in several EU Member States,
and went even beyond in some cases
(Czechia, Luxembourg, Slovakia, and
Belgium). Only in a few countries has the
industry sector not yet recovered at least 50%
of the losses recorded since February/March
(Cyprus, Finland, Ireland, Bulgaria, Greece,
Croatia, and Hungary). In retail trade, the
picture is more heterogeneous: business
assessments recovered fully or to above 75%
of their pre-crisis levels in seven countries,
while in many countries the recovery in retail
trade did hardly materialise at all or has stayed
below 50% so far. In services, the measure of
the recovery is low overall and amounts to
above 75% only in two Member States (Malta
and Slovakia). Finally, the extent of the
recovery in the building sector appears even
lower and does not amount to above 75% in
any EU Member States.
23
Graph 2.7 Recovery by September – questions about
the past production/situation
Graph 2.8 presents the same indicator of
recovery, at the subsector level, for the EU
aggregate. It confirms that the building sector,
and, in particular, Civil engineering (division
42) barely recovered the losses registered since
the outbreak of the virus. In the services sector
the recovery has also not fully materialised in
the vast majority of subsectors. The assessment
remains particularly bleak in Travel agency,
tour operator and other reservation service
(79). Assessments in the hard-hit
Accommodation (55) and Food service
activities (56) could recover somewhat more
than 50% of the initial losses. Only two
services subsectors recovered more than 80%
of previous sentiment losses:
Repair of computers and personal and
household goods (95)
Warehousing and support activities for
transportation (52).
In industry, most of the subsectors recovered
well, and the assessment of past production is
now above its pre-crisis level in three
subsectors:
Manufacture of motor vehicles, trailers and
semi-trailers (29)
Manufacture of furniture (31)
Manufacture of basic metals (24).
However, there are also several industry
subsectors where, after considerable losses
between February and May, the recovery is
still below 50%:
Manufacture of leather and related
products (15)
Manufacture of other transport equipment
(30)
Printing and reproduction of recorded
media (18).
While Graph 2.8 points to a limited extent of
the recovery also in the divisions Manufacture
of food products (10) and Manufacture of
paper and paper products (17), previous results
(Graph 2.1) had shown that the losses in these
two branches were very minor from the outset
compared to other branches.
Graph 2.8 Recovery by September – questions about the past production/situation
While the previous graphs showed that the
recovery in terms of the assessment of actual
production/the business situation is only
partial, Graph 2.9 presents the same measure
of recovery in terms of expectations. By
contrast to the questions about the past
situation, expectation questions reflect more
closely managers’ sentiment concerning the
current situation and perspectives about the
near future.
Overall, expectations recovered quicker than
the assessment of the past situation. In the
24
large majority of countries, expectations in
industry recovered almost fully, or even went
beyond their February levels (Germany,
Slovenia, Czechia, France, Malta). In services,
the recovery amounts to close to or above 75%
in most countries. In retail trade, expectations
also recovered a significant share of previous
losses, except for Malta, Greece, Cyprus, and
Belgium. Finally, (employment) expectations
in the building sector recovered much quicker
than the assessment of the past situation (with
the notable exception of Cyprus).
Graph 2.9 Recovery as of September – expectation
questions
Graph 2.10 presents the same indicator of
recovery, at the subsector level, for the EU
aggregate. In many industry subsectors,
expectations recovered virtually fully, and
even went beyond their February level. In
particular, sentiment is much higher than seven
months ago in:
Manufacture of motor vehicles, trailers and
semi-trailers (29)
Manufacture of coke and refined
petroleum products (19)
In services, the picture is broadly similar to
that of the measure based on the question about
the past situation. The recovery in expectations
has been (almost) complete in:
Repair of computers and personal and
household goods (95)
Land transport and transport via pipelines
(49)
Employment activities (78)
Warehousing and support activities for
transportation (52).
On the other hand, the subsectors Manufacture
of leather and related products (15) (in
industry) and Travel agency, tour operator and
other reservation service (79) (in services)
stand out as the ones where business
expectations have barely recovered. In both
cases, this chimes with a very limited recovery
of assessments of the past business situation.
Also Accommodation (55) and Food service
activities (56) rank among the branches where
business expectations have recovered only
slowly.
Conclusion
This special topic offers a granular picture of
the impact of the pandemic and related
containment measures at subsector level.
Being both one of the most affected sectors
during the confinement and one which hardly
recovered since then, the subsector Travel
agency, tour operator and other reservation
service is overall the most affected activity.
This is explicable by the strict travelling
restrictions imposed during the first, most
stringent phase of containment efforts and the
re-emergence of restrictions on travelling both
in- and outside of the EU since summer.
Accommodation and food service activities
were also severely hit by containment
measures. While managers’ assessments of
their past activity appear to have partially
recovered from their extreme lows, the
recovery in business expectations still appears
to be lagging behind other sectors. This can be
rationalised by the threat of renewed
restrictions, reducing restaurants’ capacity or
forcing bars to close earlier than usual, as is
currently the case already in a number of
Member States.
By contrast, industry, and in particular heavy
industry (20-29), stands out as an activity
where managers’ assessments of the past
appears to have recovered virtually fully since
February. Although the automotive industry
was one of the most affected industries in
spring, both managers’ expectations and their
assessments of the past production are now
clearly above their February level.
Finally, Manufacture of basic pharmaceutical
products and pharmaceutical preparations was
virtually unaffected by the health crisis, as
demand to this sector has arguably increased
because of the very pandemic.
25
Graph 2.10 Recovery as of September – expectation questions
26
ANNEX TO SECTION 1 Table A.1: Inflation perceptions by socio-demographic category of respondent (in %)
Average 2019 Average 2019 Average 2019 Average 2019
2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3
EU 8.8 7.1 7.1 7.9 8.0 3.8 3.0 2.9 3.3 3.5 6.5 5.1 5.0 5.5 5.9 11.0 8.8 8.5 9.7 9.9
EA 8.7 6.5 6.4 7.4 7.5 3.6 2.5 2.4 3.0 3.2 6.2 4.5 4.3 5.0 5.4 10.9 8.2 7.8 9.1 9.4
EU 7.8 6.1 6.0 6.7 6.8 3.4 2.7 2.6 2.9 3.1 5.8 4.5 4.3 4.8 5.0 9.7 7.3 7.4 8.4 8.8
EA 7.6 5.4 5.3 6.3 6.3 3.2 2.2 2.1 2.6 2.8 5.5 3.9 3.6 4.3 4.4 9.4 6.6 6.6 7.9 8.2
EU 10.0 8.4 8.5 9.3 9.5 4.2 3.3 3.3 4.0 4.2 7.3 5.9 5.8 6.7 7.1 12.6 10.5 10.4 12.1 12.1
EA 9.9 7.8 7.8 8.8 9.0 4.1 2.8 2.8 3.7 3.9 7.1 5.4 5.1 6.1 6.6 12.6 10.0 9.8 11.5 11.6
EU 9.1 7.7 7.3 7.2 7.6 3.9 3.1 2.9 2.6 2.9 6.9 5.3 5.2 4.8 5.7 11.9 9.9 9.3 9.6 9.9
EA 9.1 7.1 6.7 6.9 7.1 3.8 2.8 2.5 2.4 2.6 6.8 4.7 4.7 4.4 5.2 11.9 9.3 8.8 9.2 9.4
EU 9.0 7.3 7.3 8.3 8.2 3.9 3.0 3.0 3.6 3.7 6.6 5.1 5.2 6.0 5.9 11.3 8.9 8.8 10.4 10.3
EA 8.9 6.7 6.6 7.9 7.7 3.7 2.5 2.5 3.4 3.4 6.4 4.5 4.5 5.5 5.5 11.3 8.4 8.1 9.9 9.8
EU 8.7 6.9 7.4 8.1 8.2 3.8 3.0 3.1 3.8 3.8 6.4 4.9 5.2 6.0 6.3 10.9 8.6 9.1 10.2 10.3
EA 8.5 6.2 6.7 7.5 7.7 3.6 2.4 2.5 3.4 3.4 6.1 4.3 4.5 5.5 5.7 10.6 8.0 8.5 9.6 9.8
EU 8.5 6.7 6.5 7.4 7.8 3.9 3.1 2.8 3.4 3.6 6.4 5.1 4.7 5.5 5.8 10.6 8.1 7.8 9.3 10.0
EA 8.2 5.9 5.6 6.5 7.2 3.6 2.5 2.3 3.0 3.2 6.1 4.3 3.9 4.7 5.2 10.2 7.1 6.8 8.4 9.3
EU 10.9 9.8 9.5 10.0 10.6 4.5 3.8 3.4 4.2 4.6 7.9 6.6 6.3 7.0 7.7 14.1 12.5 12.1 13.2 13.4
EA 10.9 9.3 8.9 9.6 10.1 4.3 3.3 2.9 4.0 4.3 7.8 6.0 5.7 6.6 7.2 14.1 11.8 11.7 12.6 12.8
EU 9.3 7.4 7.7 8.4 8.9 4.0 3.2 3.2 3.8 4.1 6.9 5.5 5.4 6.4 7.1 11.8 8.8 9.2 10.4 11.7
EA 9.1 6.8 7.0 7.7 8.5 3.8 2.6 2.8 3.4 3.7 6.6 5.0 4.8 5.8 6.6 11.6 8.1 8.5 9.6 11.3
EU 8.3 6.7 6.4 7.7 7.4 3.7 3.0 2.7 3.4 3.4 6.2 5.0 4.8 5.6 5.6 10.5 8.1 7.8 10.0 9.6
EA 6.8 4.8 4.6 5.5 5.5 3.0 2.0 1.9 2.3 2.4 5.0 3.5 3.2 3.9 4.2 8.5 6.2 5.8 6.8 7.2
EU 7.0 5.5 5.5 6.0 6.1 3.2 2.6 2.5 2.7 2.8 5.3 4.2 4.0 4.4 4.7 8.8 6.9 6.7 7.5 7.9
EA 6.8 4.8 4.6 5.5 5.5 3.0 2.0 1.9 2.3 2.4 5.0 3.5 3.2 3.9 4.2 8.5 6.2 5.8 6.8 7.2
EU 10.1 8.7 8.9 9.4 9.6 4.3 3.2 3.7 4.1 4.2 7.3 5.7 6.0 6.7 6.9 12.8 10.8 11.2 12.4 12.5
EA 10.0 8.1 8.3 8.8 9.1 4.0 2.7 3.3 3.7 3.9 7.0 5.1 5.4 6.1 6.4 12.6 10.0 10.5 11.8 12.0
EU 8.8 7.6 7.6 8.4 8.5 3.8 3.1 2.9 3.5 3.7 6.5 5.5 5.2 5.9 6.2 11.1 9.1 9.1 10.4 10.8
EA 8.7 7.0 6.9 7.9 8.0 3.6 2.7 2.4 3.2 3.3 6.3 4.9 4.5 5.3 5.7 11.0 8.5 8.5 9.8 10.2
EU 7.1 5.8 5.4 6.3 6.5 3.2 2.6 2.5 2.9 3.1 5.3 4.2 4.0 4.7 5.0 9.0 7.3 6.8 7.8 8.4
EA 6.9 5.0 4.6 5.7 6.1 3.0 2.1 1.9 2.6 2.8 5.1 3.5 3.3 4.2 4.5 8.8 6.4 5.9 7.3 7.8
Education: Secondary
Education: Further
Age: 65+
Income: 1st quartile
Income: 2nd quartile
Income: 3rd quartile
Income: 4th quartile
Education: Primary
weighted mean adjusted for
outliers 25% quartile median 75% quartile
Total
2020 2020 2020 2020
Age: 50 to 64
Gender: Male
Gender: Female
Age: 16 to 29
Age: 30 to 49
27
Table A.2: Inflation expectations by socio-demographic category of respondent (in %)
Average 2019 Average 2019 Average 2019 Average 2019
2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3 2004-2020 Q4 Q1 Q2 Q3
EU 6.0 6.2 6.3 7.6 6.2 2.3 2.3 2.3 2.7 2.3 4.2 4.2 4.0 5.1 4.3 7.4 7.3 7.4 9.7 7.9
EA 5.7 5.5 5.5 6.9 5.6 2.0 1.8 1.8 2.3 1.9 3.8 3.6 3.3 4.5 3.8 6.9 6.5 6.5 8.9 7.2
EU 5.5 5.4 5.5 6.4 5.2 2.2 2.1 2.1 2.2 2.0 3.8 3.7 3.6 4.4 3.7 6.6 6.2 6.3 8.3 6.4
EA 5.1 4.8 4.7 5.8 4.7 1.9 1.6 1.5 1.8 1.7 3.4 3.0 2.9 3.9 3.2 6.1 5.4 5.3 7.6 5.7
EU 6.8 7.3 7.5 9.0 7.5 2.5 2.5 2.5 3.3 2.6 4.7 4.9 4.9 6.2 5.1 8.5 9.5 9.2 11.3 9.5
EA 6.4 6.6 6.7 8.2 6.8 2.2 2.0 2.0 2.8 2.2 4.3 4.3 4.2 5.5 4.5 8.0 8.7 8.4 10.4 8.7
EU 6.3 6.9 6.6 7.3 6.4 2.3 2.4 2.3 2.0 2.2 4.4 5.1 4.6 4.9 4.2 8.1 9.4 8.2 10.3 7.6
EA 6.0 6.2 5.9 6.7 5.7 2.1 1.9 2.0 1.6 1.8 4.1 4.5 4.0 4.5 3.7 7.8 8.7 7.5 9.7 6.8
EU 6.2 6.5 6.4 7.7 6.4 2.3 2.2 2.3 2.6 2.2 4.2 4.2 4.2 5.4 4.2 7.7 7.9 7.8 9.7 8.0
EA 5.9 5.9 5.6 7.1 5.9 2.0 1.8 1.7 2.2 1.9 3.9 3.6 3.5 4.8 3.8 7.3 7.4 6.9 9.0 7.4
EU 6.1 6.1 6.7 7.8 6.3 2.4 2.4 2.4 3.0 2.4 4.2 4.1 4.3 5.5 4.6 7.4 7.4 7.8 10.0 8.1
EA 5.6 5.4 5.9 7.1 5.7 2.1 1.8 1.9 2.5 2.0 3.8 3.4 3.6 4.8 3.9 6.9 6.5 6.8 9.0 7.5
EU 5.7 5.7 5.8 7.3 5.8 2.5 2.3 2.3 3.0 2.5 4.2 3.9 3.9 5.3 4.3 7.1 6.7 6.9 9.0 7.2
EA 5.2 4.8 4.8 6.3 5.1 2.1 1.8 1.7 2.5 2.1 3.6 3.2 3.0 4.5 3.7 6.4 5.7 5.7 7.9 6.4
EU 7.4 8.6 8.4 9.2 8.2 2.7 3.0 2.8 3.2 2.8 5.1 5.6 5.2 6.2 5.3 9.4 10.9 10.2 12.2 10.1
EA 7.0 7.9 7.7 8.4 7.6 2.4 2.5 2.2 2.8 2.4 4.7 5.0 4.6 5.7 4.9 9.0 10.2 9.4 11.2 9.3
EU 6.4 6.6 6.8 8.3 6.6 2.5 2.4 2.6 2.9 2.4 4.5 4.6 4.5 5.9 4.7 8.1 8.0 8.7 11.0 8.3
EA 6.0 5.9 6.1 7.6 6.1 2.2 2.0 2.1 2.5 2.0 4.1 3.9 3.7 5.2 4.1 7.6 7.2 7.8 10.1 7.8
EU 5.8 5.7 5.7 7.5 5.8 2.3 2.3 2.2 2.8 2.3 4.1 4.0 3.8 5.4 4.2 7.2 6.9 6.9 9.6 7.6
EA 4.6 4.2 4.2 5.4 4.1 1.8 1.6 1.5 1.7 1.5 3.1 2.8 2.6 3.8 3.0 5.6 5.0 5.0 7.2 5.1
EU 5.0 5.0 5.1 6.0 4.8 2.1 2.1 2.0 2.1 1.9 3.5 3.5 3.4 4.3 3.5 6.1 6.0 6.2 8.0 5.9
EA 4.6 4.2 4.2 5.4 4.1 1.8 1.6 1.5 1.7 1.5 3.1 2.8 2.6 3.8 3.0 5.6 5.0 5.0 7.2 5.1
EU 6.8 7.8 7.2 8.9 7.6 2.6 2.6 2.4 3.2 2.6 4.7 5.9 4.5 6.2 5.1 8.6 10.3 9.0 11.3 10.4
EA 6.4 7.1 6.5 8.1 7.2 2.2 2.1 2.0 2.8 2.3 4.3 5.5 3.9 5.7 4.6 8.0 9.5 8.2 10.3 9.9
EU 6.2 6.5 7.0 8.2 6.6 2.3 2.4 2.5 2.9 2.4 4.3 4.5 4.5 5.5 4.5 7.6 8.2 8.5 10.3 8.3
EA 5.8 5.9 6.3 7.5 5.9 2.0 1.9 2.0 2.5 2.0 3.9 3.9 3.8 4.9 3.9 7.2 7.5 7.6 9.6 7.5
EU 5.1 5.3 5.2 6.1 5.1 2.1 2.1 2.1 2.3 2.0 3.6 3.6 3.5 4.3 3.8 6.3 6.2 6.5 8.0 6.3
EA 4.8 4.5 4.2 5.4 4.6 1.8 1.6 1.5 1.9 1.7 3.3 2.9 2.8 3.7 3.3 5.9 5.3 5.2 7.2 5.7
Age: 50 to 64
Gender: Male
Gender: Female
Age: 16 to 29
Education: Secondary
Education: Further
Age: 65+
Income: 1st quartile
Income: 2nd quartile
Income: 3rd quartile
Income: 4th quartile
Education: Primary
weighted mean adjusted for
outliers 25% quartile median 75% quartile
Total
Age: 30 to 49
2020 2020 2020 2020
28
ANNEX
Reference series
Confidence
indicators
Reference series from Eurostat, via Ecowin
(volume/year-on-year growth rates)
Total economy (ESI) GDP, seasonally- and calendar-adjusted
Industry Industrial production, working day-adjusted
Services Gross value added for the private services sector, seasonally- and calendar-adjusted
Consumption Household and NPISH final consumption expenditure, seasonally- and calendar-adjusted
Retail Household and NPISH final consumption expenditure, seasonally- and calendar-adjusted
Building Production index for building and civil engineering, trend-cycle component
Economic Sentiment Indicator
The economic sentiment indicator (ESI) is a weighted average of the balances of replies to selected
questions addressed to firms and consumers in five sectors covered by the EU Business and
Consumer Surveys Programme. The sectors covered are industry (weight 40 %), services (30 %),
consumers (20 %), retail (5 %) and construction (5 %).
Balances are constructed as the difference between the percentages of respondents giving positive and
negative replies. EU and euro-area aggregates are calculated on the basis of the national results and
seasonally adjusted. The ESI is scaled to a long-term mean of 100 and a standard deviation of 10.
Thus, values above 100 indicate above-average economic sentiment and vice versa. Further details on
the construction of the ESI can be found here.
Long time series (ESI and confidence indices) are available here.
Economic Climate Tracer
The economic climate tracer is a two-stage procedure. The first stage consists of building economic
climate indicators, based on principal component analyses of balance series (s.a.) from five surveys.
The input series are as follows: industry: five of the monthly survey questions (employment and
selling-price expectations are excluded); services: all five monthly questions except prices;
consumers: nine questions (price-related questions and the question about the current financial
situation are excluded); retail: all five monthly questions; building: all four monthly questions. The
economic climate indicator (ECI) is a weighted average of the five sector climate indicators. The
sector weights are equal to those underlying the Economic Sentiment Indicator (ESI, see above).
In the second stage, all climate indicators are smoothed using the HP filter in order to eliminate short-
term fluctuations of a period of less than 18 months. The smoothed series are then normalised (zero
mean and unit standard deviation). The resulting series are plotted against their first differences. The
four quadrants of the graph, corresponding to the four business cycle phases, are crossed in an anti-
clockwise movement and can be described as: above average and increasing (top right, ‘expansion’),
above average but decreasing (top left, ‘downswing’), below average and decreasing (bottom left,
‘contraction’) and below average but increasing (bottom right, ‘upswing’). Cyclical peaks are
positioned in the top centre of the graph and troughs in the bottom centre. In order to make the graphs
more readable, two colours have been used for the tracer. The darker line shows developments in the
current cycle, which in the EU and euro area roughly started in January 2008.
EUROPEAN ECONOMY TECHNICAL PAPERS
European Economy Technical Papers can be accessed and downloaded free of charge from the following address: https://ec.europa.eu/info/publications-0/economy-finance-and-euro-publications_en?field_eurovoc_taxonomy_target_id_selective=All&field_core_nal_countries_tid_selective=All&field_core_flex_publication_date[value][year]=All&field_core_tags_tid_i18n=22620. Titles published before July 2015 can be accessed and downloaded free of charge from: http://ec.europa.eu/economy_finance/db_indicators/cpaceq/index_en.htm
(EU Candidate Potential Candidate Countries' Economic Quarterly) http://ec.europa.eu/economy_finance/publications/cycle_indicators/index_en.htm
(European Business Cycle Indicators)
GETTING IN TOUCH WITH THE EU
In person All over the European Union there are hundreds of Europe Direct Information Centres. You can find the address of the centre nearest you at: http://europa.eu/contact.
On the phone or by e-mail Europe Direct is a service that answers your questions about the European Union. You can contact this service:
• by freephone: 00 800 6 7 8 9 10 11 (certain operators may charge for these calls),
• at the following standard number: +32 22999696 or • by electronic mail via: http://europa.eu/contact.
FINDING INFORMATION ABOUT THE EU
Online Information about the European Union in all the official languages of the EU is available on the Europa website at: http://europa.eu.
EU Publications You can download or order free and priced EU publications from EU Bookshop at: http://publications.europa.eu/bookshop. Multiple copies of free publications may be obtained by contacting Europe Direct or your local information centre (see http://europa.eu/contact).
EU law and related documents For access to legal information from the EU, including all EU law since 1951 in all the official language versions, go to EUR-Lex at: http://eur-lex.europa.eu. Open data from the EU The EU Open Data Portal (http://data.europa.eu/euodp/en/data) provides access to datasets from the EU. Data can be downloaded and reused for free, both for commercial and non-commercial purposes.